Wyeth Pharmaceuticals Matthew Eyles 500 Arcola Road Vice President Public Policy Collegeville PA 19426 484 865 5132 tel

484865 I20 fax

BYELECTRONIC DELIVERY httpllsecurecommentworkscomlftc-healthcarecom~tition

December 182008

Federal Trade Commission Office ofthe Secretary Room H-135(Annex F) 600Pennsylvania Avenue NW Washington DC20580

Re Emelrging Health Care Competitionand Consumer Issna -Comment Project NoPO83901

Dear Federal Trade Commission

Wyeth Pharmaceuticalswould like to thank the Federal Trade Commission (FTC) for the opportunity to participate in the November 212008 Roundtable on Follow-On Biologic Drug Framework for Cornpetition and Continued Innovation Wyeth Pharmaceuticals a division of Wyeth is one of the worlds largest research driven pharmaceutical and health care products companies with leading products in the areas ofwomens health care infectiousdisease gastrointestinal health central nervous system inflammation transplantation hemophilia oncology vaccines and mtritiollal products

Wyeth appreciaw FTCs interest in the topic offollow-onbiologicsor biosimilars and the competitive issues that could arise upon the market availabilityof these types of products As the fourth largest biotechnology manufacturerin the world Wyeth shares FTCs interest in this topic a d hasbeen actively engaged in the global debate on appropriate regulatory approval mechanisms

Wyeth submitted initial comments to the docket on September 30 the following comments are intended to supplement that initial submissionand address specific issues that arose during the Roundtable

As we pointed out during our presentation at the November Workshop Wyeth believes the term 8 i d a r s is the most appropriate to describe these types ofproducts Accordingly that is the term used throughouth s document

Page 2 Federal Trade Commission December 182008 ProjectNoPO83901

I Certainty of an Adequate Return on Invatment Is Crucial to Pharmaceutical and Biokhnology Innovation

The pharmaceuticalbiotechnologyindustries are amongthe most risk intensive in the world It is well documented that only a miniscule percent of research projects everresult in an FDA approved and marketed drugproduct and that only one in three of such approved and mafketed products provides even a break-even return on invment It is these very few successfulproducts that provide the profit and funding that enables the development of innovative medicines and therapies for patientsinneed To undertake this riskpharmaceutical and biotechnologycompanies must have a high degree of certaintythat in those few ins tanc~where a product does reach the market they will recoup their tremendous mearch and developmentinvatment and profit beyond that investment This certainty is critical to continued medical innovation and the benefits to patients and society as a whole that such innovation yields

A Patent Protection Does Not Provide Adequate Certainty to Sgux Pharmaceutical and Biotechnology Investment and Innovation

Just as cmtainty spurs innovation and advances that benefit patients lack of certaintyin the pharmaceutical and biotechnology industries hinders innovation Although patent protection has been assumedto provide such certaintyto the pharmaceutical industry in fact it no longer provides the certainty needed to spur innovation and to undertakethe enormous costs of developing pharmaceutids And patent protection provides nomore certainty to the biotechnology industry

The value of patent rights to the pharmaceutical and biotechnology industries is less today than it has ever been in the past Changesto the law as well as to the tactics adopted by the generic industry are largely responsible for this shift These changes have renderedthe patent system an extremelyuncertain spur to innovation Although the United States Constitutionstates that the law should secure for inventors the exclusiverights to their inventions for a limited time today that Constitutional guarantee has been eroded as never before Judicial changes in the law concerning the granting ofpermanent injunctions obviousness declaratoryjudgment jurisdiction and the doctrine ofequivalents have all contributd to this erosion Patent law r e f m by Congress threatens Mererosion to the patent system

Page 3 Federal Trade Commission December 182008 Project NoPO83901

B The Current Hatch-Waxman Environment and Its Impact on Innovation

Tactical shifts by the genericindustry have further eroded the value ofpatents as an incentive to innovation to the pharmaceutical industry As a result the historical assumptionsand balancesthat underlay the Hatch-Waxman system for small molecule drugs have now become irrelevantand the system unbalanced In the years leading up to the Hatch-Wman Act patent owners and others began highlightingthe erosion of effectivepatent life to less than 17 years caused by delays in regulatory approval and predicted that a declining effectivepatent life would result in decreased expendituresfor research and development and eventually in a decline in the introduction of new drugs HRRepNo98-857(I) at 17 (1984) reprinted in 1984 USCCAN 26472650 First voiced formally by President Carters Advisory Committee on Industrid Innovation the issue of declining effectivepatent life was studied by the Office of Technology Assessment before the passage of the Act and severaI committees held extensive hearings HR Report No98-857 (11) at 3 reprinted in 1984 USCCAN 26862687 The result ofthese analyses was the creation of the Patent Term Extension provisions of the Act Those provisions provided for an effective patent life of 14 years for new pharmaceutical products Yet today pharmaceutical companies can realisticallyexpect no more than 6 to 7 years of de fact0 marketpatent exclusivityin which to obtain an adequate return on investment Not surprismgly the number of new drugs as measured by New Chemical Entity (NCE) approvalsby FDA has also consistently declined over the last 10 years2

Among the assumptionsunderlying the Batch-Waxmanbdance was that there would be basic compound patent protection fora period approximating 14 years (the maximum period ofextended patent life under the Act) It was assumed that this 14-year period ofpatent exclusivity would provide the necessary spur to pharmaceutical innovation and the correspondingpublic benefits while at the same time balancingthe need ofthe public for lower cost generic medicines

However the 14-year maximum effectivepatent life accorded (most o h ) to basic compound patents no longer provides sufficient certainty to ensure the kinds of investmentthat must be madeto bring a new drug to the market Although there was a time when generic companies virtually never challengedbasic compoundpatents today such challenges have become routine Moreover it is

B Hughes 2007FDADrug Approamp A Yea of Flux Nature Rwiews Drug Dimvery 7 107-109 (Feb 2008)

Page 4 Federal Trade Commission December 182008 Project NoPO83901

the rareNCE today that is not faced with multiplepatent challengesat the possible instance namely four years following i n i d FDA approval

This trend and the inherent uncertainty in any litigation let alone litigation as scientificallyand legally complex as patent litigationhas reducedthe period of certainty onwhich a pharmaceutical company can count to obtain an adequate return on investment to a M o n of that 14 years Considered together with the erosion of the value of patent rights dueto changes in the law aswell as the now commonoccurrenceof at-risklaunches (see eg Protonix Lotrel Famvir Accupd Zithromax Plavix Prilosec and Pulmicort) the reduction in certaintyis remarkable Today as noted abovepharmaceutical companies can count on no more than 6 to 7years of de facto marketipatent exclusivityin which to obtain an adequatereturn on investment (to recoup theirmassive research and development investment and profit sufficiently to justify that investment)

This h a t i c shift in the landscapetaken togetha with a number of different factors including the followinghas resulted in an environment that discourages pharmaceutical innovation

The high cost ofdrug development now in excess of one billion dollars and continuingto climb

The length of time it takes to bring the rare successfulproduct to the market typically in excessof 12 years

The growingodds against successfully gaining FDA approval with a dramatic increase in the number of late stage clinical failures and ever more stringent approval requirements including Phase IV commitmentsand

The increased risk of an earlygeneric entry and the impact of such an entry into the marketplace with the virtual overnight collapse of the irmovators market share and price causedby mandatory substitution laws and the impact of the littlesection 8mechanism

As a result it should come as no surprisethat there has been a decrease in traditional pharmaceutical innovationin the last ten years With somuch at risk pharmaceutical companiesmust try to shortenthe odds against successby concentrating RampD resourcesin areas likely to yield higher successrates such as enantiomers active metabolites and new formulations of alreadyapproved molecules Such areas provide a lower risk of return on investment By lowering these odds and increasing the rate ofreturn on at least some oftheir invmtment

Page 5 Federal Trade Commission December 182008 ProjectNoPO83901

Wyeth pharmaceutical companiesmay be able to fund riskier and more expensive projects in far less certain areas such as Alzheimers disease

The shorter period of certainty in todays environment has also decreased exploration by innovator companies of new uses for their already approvd small molecule drugs Once it was common for adrug to see multiple clinical tnals for new indications following approval Today given the time and expenseof doing suchtrials the even shorter time for a certainreturn on invment and the little section 8 mechanism and mandatory substitution thaeis virtually no certainty of return and therefore little incentive to explore these new uses Decisions are routinely made to forego suchclinical trials today simply because there is no certainty of an adequate t ime for a return on investme~lt

The increasingly aggressivetactics of the generic industry are a direct outgrowth of the need of all companies to show sales and earnings growth to their inv-rs As the generic industry has matured there are fewer targets of opportunityfor generic companies than ever before Multiple companies challenge every large target and many smaller targets at the first opportunity(4 years post approval) in order to enjoy the potential benefits of 1Xeday generic exclusivity Generic companiesare now pursuing even the smallest of opportunities onproducts once thought too small to justify the time or investment And consolidationin the generic industryhas accelerated as large companies continue to acquire smaller ones to obtain accessto markets and targets The end result has been a spiral in which the need ofgeneric companies to continue to show earnings growth has led directly to a decrease in innovator productivity Inthe end there will simply not be enough targets to support the generic industry

As already discussed todays Hatch-Waxman environment has made innovator RampD more risky and more costly than everbefore Certainty of an adequate ROI is a key driver for investment and without such certainty some products are not developed some research areas are not explored and decisionsare made to invest in saferopportunities In the end the public health suffers as a lack ofnew treatment options for unmet medical needs results Moreova this increased risk and the early loss of key products has also driven cost conhol measuresby the innovator industry This has resulted in a loss of USjobs the relocation of RBcD to ex-US locales (mainly India and China) and outsourcingof manufacturing and otherjobs to India and China The US economy bears the brunt of this impact The impact ofthecurrent environmentwill also result in decreased competition between innovators as companies are forced to make decisions about what kind of RampD they are willing to fund The direct r d t of this is that fewer innovative

Page 6 Federal Trade Commission December 182008 Project NoPO83901

therapies are availableto the public and patients have fewer options and face higher costs

C TheNeed for SubstantialData Exclusivity

This new environment for smallmoleculepharmaceuticalsis not sustainable in the long run for either generic or innovator companies More impmhtly the impact on the public health is being felt today with the dramatic decreasein NCE approvals Despite claimsby the generic indush-ythat the Hatch-Waxman system has been a boon to pharmaceutical innovationby forcing constant innovation the facts do not support that claim This might be true where the time lines of innovation and generic competition are roughly equal in length (eg 14 yeass) but cannot function where these timelines are so dramatically out of balance as today

Patents due to their inherent uncertaintyare insufficient as the primary motivatingfactor for innovation A substantial period ofdatdmarket exclusivity for new chemical andbiological entities can provide that incentive However the data exclusivity period provided by the Hatch-Waxman Act is too short to provide the necasarycertainty of an adequate return on investment to justifythe incredible time cost and risk involved in developinga new drug product To ensure h t sufficientincentive exists to provide the kind oftreatments and therapiesto meet the m e t medical needs of the public in dl disease areas it is necessaryto restore the ori balance between generics and innovators

11 Data Exclusivity Patenh and Biotechnology

A D e Facto Data Exclusivity Has Spurred Innovation in Biotechnologv

Biologic drug products have development timelines equal to or longer that3 for smallmolecule drugs success rat= equal to or lower than for small molecule drugs and very high RampD costs There are very few successful biotech compania Most lose money and very few survive over time The cost of manufacturing facilities is staggering and this large investment must be made long before aproduct is approvedby the regulatory agencies Yetthe US biotechnology industry is among the most vibrant industries in the world and a remarkable innovationengine in the United States

Until very recently there was no mechanism for approval of a biosimilarproduct mywhere in the world Today no such system exists in tlxe United States and only a limited system for such approvals exists in the EU and in a few other

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 3 Federal Trade Commission December 182008 Project NoPO83901

B The Current Hatch-Waxman Environment and Its Impact on Innovation

Tactical shifts by the genericindustry have further eroded the value ofpatents as an incentive to innovation to the pharmaceutical industry As a result the historical assumptionsand balancesthat underlay the Hatch-Waxman system for small molecule drugs have now become irrelevantand the system unbalanced In the years leading up to the Hatch-Wman Act patent owners and others began highlightingthe erosion of effectivepatent life to less than 17 years caused by delays in regulatory approval and predicted that a declining effectivepatent life would result in decreased expendituresfor research and development and eventually in a decline in the introduction of new drugs HRRepNo98-857(I) at 17 (1984) reprinted in 1984 USCCAN 26472650 First voiced formally by President Carters Advisory Committee on Industrid Innovation the issue of declining effectivepatent life was studied by the Office of Technology Assessment before the passage of the Act and severaI committees held extensive hearings HR Report No98-857 (11) at 3 reprinted in 1984 USCCAN 26862687 The result ofthese analyses was the creation of the Patent Term Extension provisions of the Act Those provisions provided for an effective patent life of 14 years for new pharmaceutical products Yet today pharmaceutical companies can realisticallyexpect no more than 6 to 7 years of de fact0 marketpatent exclusivityin which to obtain an adequate return on investment Not surprismgly the number of new drugs as measured by New Chemical Entity (NCE) approvalsby FDA has also consistently declined over the last 10 years2

Among the assumptionsunderlying the Batch-Waxmanbdance was that there would be basic compound patent protection fora period approximating 14 years (the maximum period ofextended patent life under the Act) It was assumed that this 14-year period ofpatent exclusivity would provide the necessary spur to pharmaceutical innovation and the correspondingpublic benefits while at the same time balancingthe need ofthe public for lower cost generic medicines

However the 14-year maximum effectivepatent life accorded (most o h ) to basic compound patents no longer provides sufficient certainty to ensure the kinds of investmentthat must be madeto bring a new drug to the market Although there was a time when generic companies virtually never challengedbasic compoundpatents today such challenges have become routine Moreover it is

B Hughes 2007FDADrug Approamp A Yea of Flux Nature Rwiews Drug Dimvery 7 107-109 (Feb 2008)

Page 4 Federal Trade Commission December 182008 Project NoPO83901

the rareNCE today that is not faced with multiplepatent challengesat the possible instance namely four years following i n i d FDA approval

This trend and the inherent uncertainty in any litigation let alone litigation as scientificallyand legally complex as patent litigationhas reducedthe period of certainty onwhich a pharmaceutical company can count to obtain an adequate return on investment to a M o n of that 14 years Considered together with the erosion of the value of patent rights dueto changes in the law aswell as the now commonoccurrenceof at-risklaunches (see eg Protonix Lotrel Famvir Accupd Zithromax Plavix Prilosec and Pulmicort) the reduction in certaintyis remarkable Today as noted abovepharmaceutical companies can count on no more than 6 to 7years of de facto marketipatent exclusivityin which to obtain an adequatereturn on investment (to recoup theirmassive research and development investment and profit sufficiently to justify that investment)

This h a t i c shift in the landscapetaken togetha with a number of different factors including the followinghas resulted in an environment that discourages pharmaceutical innovation

The high cost ofdrug development now in excess of one billion dollars and continuingto climb

The length of time it takes to bring the rare successfulproduct to the market typically in excessof 12 years

The growingodds against successfully gaining FDA approval with a dramatic increase in the number of late stage clinical failures and ever more stringent approval requirements including Phase IV commitmentsand

The increased risk of an earlygeneric entry and the impact of such an entry into the marketplace with the virtual overnight collapse of the irmovators market share and price causedby mandatory substitution laws and the impact of the littlesection 8mechanism

As a result it should come as no surprisethat there has been a decrease in traditional pharmaceutical innovationin the last ten years With somuch at risk pharmaceutical companiesmust try to shortenthe odds against successby concentrating RampD resourcesin areas likely to yield higher successrates such as enantiomers active metabolites and new formulations of alreadyapproved molecules Such areas provide a lower risk of return on investment By lowering these odds and increasing the rate ofreturn on at least some oftheir invmtment

Page 5 Federal Trade Commission December 182008 ProjectNoPO83901

Wyeth pharmaceutical companiesmay be able to fund riskier and more expensive projects in far less certain areas such as Alzheimers disease

The shorter period of certainty in todays environment has also decreased exploration by innovator companies of new uses for their already approvd small molecule drugs Once it was common for adrug to see multiple clinical tnals for new indications following approval Today given the time and expenseof doing suchtrials the even shorter time for a certainreturn on invment and the little section 8 mechanism and mandatory substitution thaeis virtually no certainty of return and therefore little incentive to explore these new uses Decisions are routinely made to forego suchclinical trials today simply because there is no certainty of an adequate t ime for a return on investme~lt

The increasingly aggressivetactics of the generic industry are a direct outgrowth of the need of all companies to show sales and earnings growth to their inv-rs As the generic industry has matured there are fewer targets of opportunityfor generic companies than ever before Multiple companies challenge every large target and many smaller targets at the first opportunity(4 years post approval) in order to enjoy the potential benefits of 1Xeday generic exclusivity Generic companiesare now pursuing even the smallest of opportunities onproducts once thought too small to justify the time or investment And consolidationin the generic industryhas accelerated as large companies continue to acquire smaller ones to obtain accessto markets and targets The end result has been a spiral in which the need ofgeneric companies to continue to show earnings growth has led directly to a decrease in innovator productivity Inthe end there will simply not be enough targets to support the generic industry

As already discussed todays Hatch-Waxman environment has made innovator RampD more risky and more costly than everbefore Certainty of an adequate ROI is a key driver for investment and without such certainty some products are not developed some research areas are not explored and decisionsare made to invest in saferopportunities In the end the public health suffers as a lack ofnew treatment options for unmet medical needs results Moreova this increased risk and the early loss of key products has also driven cost conhol measuresby the innovator industry This has resulted in a loss of USjobs the relocation of RBcD to ex-US locales (mainly India and China) and outsourcingof manufacturing and otherjobs to India and China The US economy bears the brunt of this impact The impact ofthecurrent environmentwill also result in decreased competition between innovators as companies are forced to make decisions about what kind of RampD they are willing to fund The direct r d t of this is that fewer innovative

Page 6 Federal Trade Commission December 182008 Project NoPO83901

therapies are availableto the public and patients have fewer options and face higher costs

C TheNeed for SubstantialData Exclusivity

This new environment for smallmoleculepharmaceuticalsis not sustainable in the long run for either generic or innovator companies More impmhtly the impact on the public health is being felt today with the dramatic decreasein NCE approvals Despite claimsby the generic indush-ythat the Hatch-Waxman system has been a boon to pharmaceutical innovationby forcing constant innovation the facts do not support that claim This might be true where the time lines of innovation and generic competition are roughly equal in length (eg 14 yeass) but cannot function where these timelines are so dramatically out of balance as today

Patents due to their inherent uncertaintyare insufficient as the primary motivatingfactor for innovation A substantial period ofdatdmarket exclusivity for new chemical andbiological entities can provide that incentive However the data exclusivity period provided by the Hatch-Waxman Act is too short to provide the necasarycertainty of an adequate return on investment to justifythe incredible time cost and risk involved in developinga new drug product To ensure h t sufficientincentive exists to provide the kind oftreatments and therapiesto meet the m e t medical needs of the public in dl disease areas it is necessaryto restore the ori balance between generics and innovators

11 Data Exclusivity Patenh and Biotechnology

A D e Facto Data Exclusivity Has Spurred Innovation in Biotechnologv

Biologic drug products have development timelines equal to or longer that3 for smallmolecule drugs success rat= equal to or lower than for small molecule drugs and very high RampD costs There are very few successful biotech compania Most lose money and very few survive over time The cost of manufacturing facilities is staggering and this large investment must be made long before aproduct is approvedby the regulatory agencies Yetthe US biotechnology industry is among the most vibrant industries in the world and a remarkable innovationengine in the United States

Until very recently there was no mechanism for approval of a biosimilarproduct mywhere in the world Today no such system exists in tlxe United States and only a limited system for such approvals exists in the EU and in a few other

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 4 Federal Trade Commission December 182008 Project NoPO83901

the rareNCE today that is not faced with multiplepatent challengesat the possible instance namely four years following i n i d FDA approval

This trend and the inherent uncertainty in any litigation let alone litigation as scientificallyand legally complex as patent litigationhas reducedthe period of certainty onwhich a pharmaceutical company can count to obtain an adequate return on investment to a M o n of that 14 years Considered together with the erosion of the value of patent rights dueto changes in the law aswell as the now commonoccurrenceof at-risklaunches (see eg Protonix Lotrel Famvir Accupd Zithromax Plavix Prilosec and Pulmicort) the reduction in certaintyis remarkable Today as noted abovepharmaceutical companies can count on no more than 6 to 7years of de facto marketipatent exclusivityin which to obtain an adequatereturn on investment (to recoup theirmassive research and development investment and profit sufficiently to justify that investment)

This h a t i c shift in the landscapetaken togetha with a number of different factors including the followinghas resulted in an environment that discourages pharmaceutical innovation

The high cost ofdrug development now in excess of one billion dollars and continuingto climb

The length of time it takes to bring the rare successfulproduct to the market typically in excessof 12 years

The growingodds against successfully gaining FDA approval with a dramatic increase in the number of late stage clinical failures and ever more stringent approval requirements including Phase IV commitmentsand

The increased risk of an earlygeneric entry and the impact of such an entry into the marketplace with the virtual overnight collapse of the irmovators market share and price causedby mandatory substitution laws and the impact of the littlesection 8mechanism

As a result it should come as no surprisethat there has been a decrease in traditional pharmaceutical innovationin the last ten years With somuch at risk pharmaceutical companiesmust try to shortenthe odds against successby concentrating RampD resourcesin areas likely to yield higher successrates such as enantiomers active metabolites and new formulations of alreadyapproved molecules Such areas provide a lower risk of return on investment By lowering these odds and increasing the rate ofreturn on at least some oftheir invmtment

Page 5 Federal Trade Commission December 182008 ProjectNoPO83901

Wyeth pharmaceutical companiesmay be able to fund riskier and more expensive projects in far less certain areas such as Alzheimers disease

The shorter period of certainty in todays environment has also decreased exploration by innovator companies of new uses for their already approvd small molecule drugs Once it was common for adrug to see multiple clinical tnals for new indications following approval Today given the time and expenseof doing suchtrials the even shorter time for a certainreturn on invment and the little section 8 mechanism and mandatory substitution thaeis virtually no certainty of return and therefore little incentive to explore these new uses Decisions are routinely made to forego suchclinical trials today simply because there is no certainty of an adequate t ime for a return on investme~lt

The increasingly aggressivetactics of the generic industry are a direct outgrowth of the need of all companies to show sales and earnings growth to their inv-rs As the generic industry has matured there are fewer targets of opportunityfor generic companies than ever before Multiple companies challenge every large target and many smaller targets at the first opportunity(4 years post approval) in order to enjoy the potential benefits of 1Xeday generic exclusivity Generic companiesare now pursuing even the smallest of opportunities onproducts once thought too small to justify the time or investment And consolidationin the generic industryhas accelerated as large companies continue to acquire smaller ones to obtain accessto markets and targets The end result has been a spiral in which the need ofgeneric companies to continue to show earnings growth has led directly to a decrease in innovator productivity Inthe end there will simply not be enough targets to support the generic industry

As already discussed todays Hatch-Waxman environment has made innovator RampD more risky and more costly than everbefore Certainty of an adequate ROI is a key driver for investment and without such certainty some products are not developed some research areas are not explored and decisionsare made to invest in saferopportunities In the end the public health suffers as a lack ofnew treatment options for unmet medical needs results Moreova this increased risk and the early loss of key products has also driven cost conhol measuresby the innovator industry This has resulted in a loss of USjobs the relocation of RBcD to ex-US locales (mainly India and China) and outsourcingof manufacturing and otherjobs to India and China The US economy bears the brunt of this impact The impact ofthecurrent environmentwill also result in decreased competition between innovators as companies are forced to make decisions about what kind of RampD they are willing to fund The direct r d t of this is that fewer innovative

Page 6 Federal Trade Commission December 182008 Project NoPO83901

therapies are availableto the public and patients have fewer options and face higher costs

C TheNeed for SubstantialData Exclusivity

This new environment for smallmoleculepharmaceuticalsis not sustainable in the long run for either generic or innovator companies More impmhtly the impact on the public health is being felt today with the dramatic decreasein NCE approvals Despite claimsby the generic indush-ythat the Hatch-Waxman system has been a boon to pharmaceutical innovationby forcing constant innovation the facts do not support that claim This might be true where the time lines of innovation and generic competition are roughly equal in length (eg 14 yeass) but cannot function where these timelines are so dramatically out of balance as today

Patents due to their inherent uncertaintyare insufficient as the primary motivatingfactor for innovation A substantial period ofdatdmarket exclusivity for new chemical andbiological entities can provide that incentive However the data exclusivity period provided by the Hatch-Waxman Act is too short to provide the necasarycertainty of an adequate return on investment to justifythe incredible time cost and risk involved in developinga new drug product To ensure h t sufficientincentive exists to provide the kind oftreatments and therapiesto meet the m e t medical needs of the public in dl disease areas it is necessaryto restore the ori balance between generics and innovators

11 Data Exclusivity Patenh and Biotechnology

A D e Facto Data Exclusivity Has Spurred Innovation in Biotechnologv

Biologic drug products have development timelines equal to or longer that3 for smallmolecule drugs success rat= equal to or lower than for small molecule drugs and very high RampD costs There are very few successful biotech compania Most lose money and very few survive over time The cost of manufacturing facilities is staggering and this large investment must be made long before aproduct is approvedby the regulatory agencies Yetthe US biotechnology industry is among the most vibrant industries in the world and a remarkable innovationengine in the United States

Until very recently there was no mechanism for approval of a biosimilarproduct mywhere in the world Today no such system exists in tlxe United States and only a limited system for such approvals exists in the EU and in a few other

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 5 Federal Trade Commission December 182008 ProjectNoPO83901

Wyeth pharmaceutical companiesmay be able to fund riskier and more expensive projects in far less certain areas such as Alzheimers disease

The shorter period of certainty in todays environment has also decreased exploration by innovator companies of new uses for their already approvd small molecule drugs Once it was common for adrug to see multiple clinical tnals for new indications following approval Today given the time and expenseof doing suchtrials the even shorter time for a certainreturn on invment and the little section 8 mechanism and mandatory substitution thaeis virtually no certainty of return and therefore little incentive to explore these new uses Decisions are routinely made to forego suchclinical trials today simply because there is no certainty of an adequate t ime for a return on investme~lt

The increasingly aggressivetactics of the generic industry are a direct outgrowth of the need of all companies to show sales and earnings growth to their inv-rs As the generic industry has matured there are fewer targets of opportunityfor generic companies than ever before Multiple companies challenge every large target and many smaller targets at the first opportunity(4 years post approval) in order to enjoy the potential benefits of 1Xeday generic exclusivity Generic companiesare now pursuing even the smallest of opportunities onproducts once thought too small to justify the time or investment And consolidationin the generic industryhas accelerated as large companies continue to acquire smaller ones to obtain accessto markets and targets The end result has been a spiral in which the need ofgeneric companies to continue to show earnings growth has led directly to a decrease in innovator productivity Inthe end there will simply not be enough targets to support the generic industry

As already discussed todays Hatch-Waxman environment has made innovator RampD more risky and more costly than everbefore Certainty of an adequate ROI is a key driver for investment and without such certainty some products are not developed some research areas are not explored and decisionsare made to invest in saferopportunities In the end the public health suffers as a lack ofnew treatment options for unmet medical needs results Moreova this increased risk and the early loss of key products has also driven cost conhol measuresby the innovator industry This has resulted in a loss of USjobs the relocation of RBcD to ex-US locales (mainly India and China) and outsourcingof manufacturing and otherjobs to India and China The US economy bears the brunt of this impact The impact ofthecurrent environmentwill also result in decreased competition between innovators as companies are forced to make decisions about what kind of RampD they are willing to fund The direct r d t of this is that fewer innovative

Page 6 Federal Trade Commission December 182008 Project NoPO83901

therapies are availableto the public and patients have fewer options and face higher costs

C TheNeed for SubstantialData Exclusivity

This new environment for smallmoleculepharmaceuticalsis not sustainable in the long run for either generic or innovator companies More impmhtly the impact on the public health is being felt today with the dramatic decreasein NCE approvals Despite claimsby the generic indush-ythat the Hatch-Waxman system has been a boon to pharmaceutical innovationby forcing constant innovation the facts do not support that claim This might be true where the time lines of innovation and generic competition are roughly equal in length (eg 14 yeass) but cannot function where these timelines are so dramatically out of balance as today

Patents due to their inherent uncertaintyare insufficient as the primary motivatingfactor for innovation A substantial period ofdatdmarket exclusivity for new chemical andbiological entities can provide that incentive However the data exclusivity period provided by the Hatch-Waxman Act is too short to provide the necasarycertainty of an adequate return on investment to justifythe incredible time cost and risk involved in developinga new drug product To ensure h t sufficientincentive exists to provide the kind oftreatments and therapiesto meet the m e t medical needs of the public in dl disease areas it is necessaryto restore the ori balance between generics and innovators

11 Data Exclusivity Patenh and Biotechnology

A D e Facto Data Exclusivity Has Spurred Innovation in Biotechnologv

Biologic drug products have development timelines equal to or longer that3 for smallmolecule drugs success rat= equal to or lower than for small molecule drugs and very high RampD costs There are very few successful biotech compania Most lose money and very few survive over time The cost of manufacturing facilities is staggering and this large investment must be made long before aproduct is approvedby the regulatory agencies Yetthe US biotechnology industry is among the most vibrant industries in the world and a remarkable innovationengine in the United States

Until very recently there was no mechanism for approval of a biosimilarproduct mywhere in the world Today no such system exists in tlxe United States and only a limited system for such approvals exists in the EU and in a few other

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 6 Federal Trade Commission December 182008 Project NoPO83901

therapies are availableto the public and patients have fewer options and face higher costs

C TheNeed for SubstantialData Exclusivity

This new environment for smallmoleculepharmaceuticalsis not sustainable in the long run for either generic or innovator companies More impmhtly the impact on the public health is being felt today with the dramatic decreasein NCE approvals Despite claimsby the generic indush-ythat the Hatch-Waxman system has been a boon to pharmaceutical innovationby forcing constant innovation the facts do not support that claim This might be true where the time lines of innovation and generic competition are roughly equal in length (eg 14 yeass) but cannot function where these timelines are so dramatically out of balance as today

Patents due to their inherent uncertaintyare insufficient as the primary motivatingfactor for innovation A substantial period ofdatdmarket exclusivity for new chemical andbiological entities can provide that incentive However the data exclusivity period provided by the Hatch-Waxman Act is too short to provide the necasarycertainty of an adequate return on investment to justifythe incredible time cost and risk involved in developinga new drug product To ensure h t sufficientincentive exists to provide the kind oftreatments and therapiesto meet the m e t medical needs of the public in dl disease areas it is necessaryto restore the ori balance between generics and innovators

11 Data Exclusivity Patenh and Biotechnology

A D e Facto Data Exclusivity Has Spurred Innovation in Biotechnologv

Biologic drug products have development timelines equal to or longer that3 for smallmolecule drugs success rat= equal to or lower than for small molecule drugs and very high RampD costs There are very few successful biotech compania Most lose money and very few survive over time The cost of manufacturing facilities is staggering and this large investment must be made long before aproduct is approvedby the regulatory agencies Yetthe US biotechnology industry is among the most vibrant industries in the world and a remarkable innovationengine in the United States

Until very recently there was no mechanism for approval of a biosimilarproduct mywhere in the world Today no such system exists in tlxe United States and only a limited system for such approvals exists in the EU and in a few other

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 7 Federal Trade Commission December 182008 Project NoPO83901

jurisdictions around the world As a result of this historical inability of others to rely on an innovators data we have seen the biotechnology industry and innovation within thatindustry thrive while traditional small molecule pharmaceutical innovation has d k e d Although there is no specific provision in the law for data exclusivity for biologic drugs there has been noneed for one Instead biologics have enjoyed de facto dataexclusivity due to the absence ofa mechanism by wbich a competitorcan rely on dataprovided to FDA This exclusivityhas p t l y contributedto the thriving biotechnology industryin the United States and to the developmentofinnovative life-changing medicines by that industry

B Patents in the BiotechnologyArea

Although competition in the biologics area can be intense (see eg human growth hormone anti-TNF biologics) such competitionhas not discouraged innovation in this area The public has enjoyed the benefits ofsuchcompetition with new products product improvements and price competition Moreover patent protection for innovator molecules has not discouraged comFtion by other innovators Indeed patent prokctiononbiologic products has spurred attempts to innovate around compdtor patents resulting in additional advancements Patent protection for biologic drugs hasto date been less important to product development than for small moleculepharmaceuticals in the Hatch-Waxman context This is directly due to the lack of a biosimilar mechanism As with traditional pharmaceuticalspatent litigation between innovators concerning biological drug products is relativelyrare

Moreover patents relatingto biologic drugprducts provide no more certainty to innovator companiesthan do patents for d l molecule drugs Indeed due to the cmrmt unceztainty regarding regulatory requirementsfor a biosimilar product there is far less certainty today that patents will provide robust protection and thereforeincentive to invest to innovator companies However it is likely that patents relevant to biosirnilars will provide less certainty than even that provided by patents for small moleculedrug

Unlike with small molecule drugs with which a generic prduct must show sameness it is anticipated that a follow-onbiologicproduct will only have to meet a similarityrequirement A generic small mdeculeproduct will by

As we stated in rrur earlier submissionbiosirnilars m o tbe rated for interchangeability in the same way as chemical generic compounds While most traditional amp m i d molecules mube exactly replicated allowing products that incorporate the moleculesto be found

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 8 Federal Trade Commission December 182008 Project NoPO83901

delinition infringe at least some ofthe core patents relating to a small rnolecule pharmaceutical suchas the patent on the active ingredient itself typically referred to as the compoundpatent Under a similaritystandard for follow-on biologics infiingement can not be assumed as it may be possible to design around patents relatingto the activemolecule itself It is unknown today by how much a biosimilar may differ h m an innovatorbiologic praduct Nucleotide amino acid and glycosylation differences between biosimilars and innovator products and the patents thereon may have an impact on ihgefllent And where there is no literal fingement the recent reductionin the scope and application of the doctrineof equivalentswill make it less likely that innovator patents will be infringed after evenminor changes

Moreover as the biotechnology industry hasmatured it has become far harder to obtainbroad patents relating to biologic drug products While some currently marketed biologic products enjoy broad patent protection this is far less likely to occur today or in the future Therefore the patent portfolios of todays marketed biologicproducts do not form a good model for predicting the future impact of patents in a biosimilar context As a legislative approach for biosidars is developed an important balance must be struck between the desire to ease access for biosimilars to todays marketed products and the need to ensure that adequate incentives exist to ensurethe innovation and investment needed to produce tomorrows products Transition provisions that differentiatebetween todays already marketed products and those not yet approved should be drawn carefully to ensure this balance

ioquivaht- and thereforepotentiallyeligible to be rated as interchangeable - ifthey meet applicable data requirements it is not possible to make an exact copy ofa biologicalproduct b e to its derivation b m cell culture orwhole living organisms and the complex manufacturing processes involved As such there is b o d to be a degree of variabilityin any attempt to copy a biologic which is why biosimib mmot automaticallybe deemed interchangeablewithapproved innovatorproducts

Questions of biosimilar interchangeabilityare inherentlyscientific and require careful considerationof the short atul long term effects ofthe biosirnjlarproducts safety efficacy and irmnunologiczllprofamp kcunsideratio~lsare most appropriatelyd e by the Food and Drug Ahinismtion (FDA) in its capacity as a science-basedgovernmental agency To demonstrate interchangeabilityapplicantsshould be required to provide additional clinical data clearly establishing the safety of interchangeable use of the innovator a d biosimdar including immunological safety as applicable as well ashead-amphead clinical trial data dem-hg theeqnivalent clinical efficacy ofthe products

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 9 Federal Trade Commission December 182008 Project NoPO83901

Finally the development of the law relative to the biologic drug industry is still in its relativeinfancy Historicallythe few cases inthis area have tended to focus on the enablement and writtendescription requirements of 35 USC 5 112 There have been even fewer cases regarding invalidity for anticipationand obviousnessunder 35 USC $9 102 and 103 None of these cases have been decided in the contextofbiosimilars The development ofthe case law in this area will clearlyplay an impartant role moving forward As of now and for the foreseeable future it simply presents more uncertainty Grven the level of uncertaintysurroundingthe value and role of patents in todays Hatch-Waxman enviromenf it is safe to say that patents in the biotechnology arenaprovide innovator companieswith no more certainty and likely less

C Less ThanAdequate Data Exclusivity Would Stifle Innovation and Harm the Public

As with traditional small molecule pharmaceuticalsthen in thebiotmhnology field there is both competitionbetween innovators and the threat and promise of patents Missing fimthe biologics area however is the intense pressure and uncertainty provided for small molecule drugs by overly short data exclusivity periods Thered t is an area that enjoys substantial innovation and competition in which investment and innovation are driven in large measureby the certainty that if a product does gain regulatory approval others will not be able to rely on the data obtainedby the innovator at such great expense

It is thus vital that any legislation onbiosimilars provide adequate datdmket exclusivity Anythmg less would threaten this vibrant US industry and wodd exacerbate the RampD shift and outsourcingto India and China already seen in the traditional small moleculepharmaceutical industry More importantly a system that allows reliance on innovator data without adequate protection for that data would d t in decreased innovation RampD would shift away from new treatments for new diseasesthus depriving the public of much needed treatments for manet medical needs toward safer bets such as new formulations or second generation molecules Thenumber of post-approvalclinical trials Wting new uses of already approvedbiologics would drastically decrease due to the lack of certainty ofan adequate return on inv-ent Instead ofanti-cancerbiologics being tested in a dozen or moreindications in large scale base W clinical trials no attempt would be made to broaden the use of approvedbiologic drugs Patients and the public health would lose out

Lack of adquate datdrnarket exclusivityfor biologics would have a significant negative impact on inveshnent in biotechnology Investment in small and mid-

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 10 Federal Trade Commission December 182008 ProjectNo PO83901

Wyeth size biotechnologycompanies already suffering due to the current economic conditions would M adryup And almost certainly the biotechnology industry would be transformed by consolidationin much the same way that the pharmaceutical ind was in the 1980s and 1990s

Finally if there is not an adequatebalance between innovators and biosimilars in the longrun there will be a decrease in the number of gets of opporhmtf for oopying In the short run there will certainlybe a flurry of activity in the area Butover time as with small molecule pharmaceuticals an imbalance between innovation andl copying will result in a decrease in the nurnber of targets available to biosimilar companies and increased consolidation

D AnAdequate Data Exclusivity Period Would Properly Balance Innovation and Competition

Any legislationregardingbiosimilars should provide for a minimum term of datahnarket exclusivity of 14 years As discussed above the legislativehistory of the Hatch-Waxman Act makes it clear Congress recognized that the decline in effective patent life to less than 17 years would result in decreased expenditures for RampD and eventually a decline in new drugs Yet today under the current Hatch-Waxman environment effective patent life for small molecule pharmaceuticalsis now far less than that target The harmful results of this environment have been discussed above An adequate datalmarket exclusivity term must ensure an adequatereturn on investment for innovators in view of the enormous risk time and cost of developinga biologic product for regulatory approval Patents simply do not provide the necessary certaintyto provide this incentive Moreover datdmarket exclusivity and patents serve different functions Data exclusivityprovides a reward for the investment of time and money needed to generate data for regulatory approval Patents provide a reward for invention regardless ofthe time ormoneyunderlying the invention The two rewards are not co-extensive An inventor need not undatake the time and expense to develop her invention Yet that inventor may still assert the patent against others Likewise a company investing time and money inpre-clinical and clinical k i d s need not obtain a patent It should howeverbe entitled to separate and strong protection against unauthoamped use of that data

Adequate datalmarket exclusivity of at least 14 years would enhance competition between innovator companiesby encouraging the investment of time and resources in bringing alternative innovative treatments forward Data exclusivity does not prevent innovative competitionIt simplyprevents unauthorized use of data Patients and the public healthwill benefit from the increased health care

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 11 Federal Trade Commission December 182008 ProjectNo PO83901

opticms and price competitionresultingfrom innovator vs innovator competition

Adequate datdmasket exclusivity would also spur secondary innovation In partimlsur a period of at least 14 years would provide the necessary assurance of an adequate return on invmtment to permit innovators to conduct clinical research to explore alternativeuses oftheir already approvedbiologic products These lengthy costly largmcale clinical trials can only be undertaken if there is sufficient time and incentive The benefits of new uses for patients and the public have been amply demonstratedby the examples of anti-cancaantibodiesand anti-TNF biologics Such advances would not have been made if innovators were concaned about early genericentry Moreover adequate datamarket exclusivityallows sufficient time for advances in product and process improvement The new technology arisingthere from benefits everyone

Finally therewill be no negativeimpact on competition from an adequate datalmdet exclusivity period ofat least 14 years Transition provisions in any legislation can ensure that existing products do not unfairlybenefit h m such a period Therefore a sufficientlylong amptamarket exclusivityperiodwill have little to no short-termimpact on compehtion Thus the complexity lengthand cost of patent litigation will be reduced by an adequate datairnarketexclusivity paiod Patents still existing at the end ofthis datalmarket exclusivityperiod are likely to be those relating to product or process improvementsornew uses Companies wishing to rely on the data of an innovator should not need to use suchtechnology to produce a biosimilar product as such a product by definition will not be an exact copy

E Economic Theories ofCompetition

D h g the November Workshop FTC staff praented a slide offering assumptionsof maiket ampects based on competition amongvarious typeof market entrantsBased on our interpretation of this graphic Wyeth believes the methodologyused for the FTC suggested goal and economic target curve is inadequate An appropriate break-even analysismust allow for a large mature portfolio or industry includethe risk of failure (both product development and marketing risks) and include an appropriate retwn on invested capital

Wyeth agrees with Grabowski that the appropriateperiod ofdata exclusivityfor biologics should be 129 to 162 years Wyeth believes that the economic break-

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 12 Federal Trade Commission Decemba 1 82008 Project NoPO83901

even analysisprovided by Grabowski usesan appropriate methodology As the FTC is aware Grabowskis NPV analysis$incorporates

A portfolio ofbiologics marketed by a mature company

The average risk adjusted cost of research and developmentneeded to bring a new biologic to market

t Other sourcesofrisk related to cost and value and

The required return on capital for investors

However the FTC curve does not appear to consider these essential elements

In addition the ITCsanalysis does not appear to consider the external bendampto society when consideringthe trade-off between innovation and price competition As Grabowski noted when the output ofinnovation has important external benefits to society-as in the case ofnew medicines and new indications for existing medicines -this also supports a longer exclusivityperiod

Even if the FCCanalysiswere based on an appropriatebreak-evenmethodology it would have a debimentai impact on the incentives for innovation The FTC suggested curve (as well as the Grabowski and Brill analyses) is based on a net present value orNPV calculation NPV is equal to the difference between the initial investment or cash outflowsand the present value of the future cash flows generatedby the investmeat TheNPV rule states that only investmentsthat generate positive net present values (iethe cash inflows exceed the cash outflows) shouldbe undertaken Similar to the NPV rule the rate of return rule states that only investments that generate a rate ofreturnthat exceeds the cost of capital should beundertaken The FTC analysis flies in the faceofthese fundamentalrules of hance because it would result in investments that wuld only generate anNPV of SO or slitlynewve which means that the rate of return would not exceed the cost ofcapital Since asMr Brill state in his paper [a] positivelyvalued portfolio is one that will be funded by investor^^ the ITC analysis would if it f m e d the basis for legislation clearlymake it more difficult if not impossible to attract capital needed to fund innovative new projects-

4 H GrabowskiTollow-onbiologics data exctasivityand the balance between innovation and competitionNature Reviews Drug Discovery IAOP published online 12 May 2008 doi101038nrd2532 k Brill Proper Duration of DataExclusivity for Gweric BiologicsA Critique available wline atwwwte~adcw~ri11~Exclusivi ty~in~Biogs pdf (November 2008)

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 13 Federal TradeCommission December 182008 Project NoPO83901

III An Early Patent Resolution Mechanism Must Be Paired With Adequate Data Exclusivity

In order to ensure an adequate bdance between innovation and competitionthat benefits the public an early patent resolutionmechanismmust be paired with adequate data exclusivity Such a mechanism would allow for certainty on the part of all interestedparties including innovator companies biosimilar manufacturers third party payers and most importantly patients The foundations of such a system are relativelyfew

Assurance for all interested parties that upona date certain there could be biosimilar competition This will pennit reasoned decision makingby innovators biosidar manufacturersthird party payers healthcare providers and patients

Full disclosureby all participants in the earlypatent resolution mechanism For patentees thiswould require full disclosure ofthe patents at issue inany dispute For biosimilar applicantsthis would requirefulldisclosure of their application for regulatoryapproval including all manufacturingprocess details There shouldbe amechanism for enforcingthese obligations in order to discourage gamesmanshipby all participants consistentwith traditional principles of fairness and the interests ofjustice

Sufficient time to fully resolve patent disputes Any patent resolution mechanism must provide for the initiation of patent disputes early moua that there is an opportunityfor considdon through the Court of Appeds prior to the expirationofWmarket exclusivity At the same time a patent resolutionproceeding shouldnot be initiated at apoint in time that is too early when the amptails of the biosimilar product are not yet fully defined ormanufacturing processes are st111 subject to change

Linkage of patent resolutionto regulatory approval In order to provide certainty to all parties concerning the outcome of anypatent resolution mechanism a linkage mechanism is required Such a mechanismneed not be overly burdensome on any party and should be based on notice and full disclosurebybiosimilar applicantsand full identification of patents at issue by innovator patent holders

Wyeth would be pleased to participatein any discussionwith the FTC staff or any others regarding the specific requirements and components of a patent resolution mechanism

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals

Page 14 Federal Trade Commission December 182008 Project NoPO83901

Again Wyeth appreciatesthe opportunityto comment on the important issues raised at the FTCs Roundtable on Follow-On Biologic Drug We look forward to engaging with the FTC on the elementsofa meaningfid and appropriate regulatory approval mechanism for b i o s i m If you have any questions about Wyeths comments please do not hesitate to contact me

Sincerely

Matthew D Eyles Vice President Public Policy Wyeth Pharmaceuticals